Cash buyer GMS reports that the US 25% tariffs on Chinese steel and aluminum are already destabilizing ship recycling markets, according to Marine Link.
Market Uncertainties
Compounding market uncertainties have taken center stage. Uncalculated tariff wars have sent economies rocking this week, unintentionally targeting the U.S. dollar as the beneficiary to a crisis that is still unfolding, sending it into a tizzy as it declined against nearly all of the major ship recycling destinations, except for Turkey where it plummeted nearly 0.5% this week, creating a record low.
Downward pressure on tabled prices has remained unrelenting since the start of the year, and the ongoing and intolerable performances of key fundamentals have continued to push levels down ever since USD 600/Ton was achieved back in January 2024. Flatlining steel plate prices across the board, including declining levels from India that have fallen more than $11/ton over two weeks alone, have done little for prevailing offerings.
Future Uncertain
Over the last year, both India and Pakistan faced significant challenges due to the influx of cheaper Chinese steel imports, which undercut local inventories and led to a collapse in sub-continent steel markets. Although both governments introduced anti-dumping tariffs to mitigate the impact of these imports, there remains considerable uncertainty regarding the potential repercussions of these latest rounds of tit-for-tat tariffs on the ship recycling industry.
As recycling markets have deteriorated by nearly $30/LDT this year, and this downward trend appears to be continuing, the first seven weeks of 2025 have painted a gloomier picture than anticipated. This is despite a bullish start to the year that witnessed numerous LNG carriers and at least 10 Panamax bulkers from the Chinese/Far Eastern markets being sold for recycling.
Consequently, the future remains uncertain. The year could potentially witness a landmark shift in the ship recycling landscape, with yards in Bangladesh and Pakistan undergoing upgrades to comply with the Hong Kong Convention standards ahead of its entry into force post-June 30th. Notably, Pakistan concluded the week with its only delivery of the year.
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Source: Marine Link
